The generalized demand and supply functions for good X are

The generalized demand and supply functions for good X are Qd = 638 – 8P + 0.005M – 4PY; Qs = 300 + 3P Where QD = quantity demanded of good X P = price of good X M = consumer income PY = price of good Y QS = quantity supplied of good X P = price of good X a. Are good X and good Y substitutes or complements? How do you know?

b. Is good X a normal good or an inferior good? How do you know?

c. What is the demand function when M = $15,000, PY = $20?

d. Solve for the equilibrium price (Po) and the equilibrium quantity (Qo).

e. Suppose that, on average, consumer income rises to $20,000. Solve for the new equilibrium price (P1) and the new equilibrium quantity (Q1).

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